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Cape Town - Despite the fact that the gold price
has recently made new historical highs and traded above $1 060 an ounce, in
rand terms, the yellow metal is 25% less than what it was in February/March
this year when it was around R10 000 an ounce.
Since April this year the
price of gold has drifted sideways despite the fact that the gold price in dollars has moved from $940 to $960, an increase of almost 13%.
"At current levels of around R7 500 an ounce, gold offers extreme
value," according to precious metals analyst David Levenstein. "Even though
it might be possible for the gold price in rand terms to trade even slightly
lower in the short term, I believe that the next move is upwards. And I
won't be surprised to see a re-test of R10 000 within the next six months."
While the price of gold can be extremely volatile in the short term,
many analysts are predicting much higher prices in the long term. Some of
their forecasts suggest the price of gold will go as high as $5 000 an
ounce. "Personally, I am not sure that we will see such high prices, but I
am convinced that in the long term we may see prices of around $2 500 to
$3 000 and a rand price of gold as high as R15 000 if not more," says
Levenstein. He also recommends that now is the time for investors to
accumulate a holding of gold bullion bars and coins.
Up until May this year it was illegal for South African investors to own
gold bars, but now after some 99 years, this law has finally changed. "If
you're not in this market you absolutely need to buy physical gold and
silver here," says Levenstein. "Whether it stays above a thousand or drops
below is of no consequence for a long-term investor. As it is likely that
gold will go to $27nbsp;000 or even $3 000 or more, if you bought it as it broke
through $1 000 and then went back under $1 000 for a while, you might be
concerned for a short while, but ultimately it is going much higher in the
longer term.
"But stick to bullion, and beware of dealers who try to persuade you to
buy commemorative or inaugural medallions at highly inflated prices. Unless
you are interested in collectables, stick to bullion."
- I-Net Bridge